The Shock Doctrine

Disaster Capitalism in Action: offshore drilling

Big Oil Avoids Paying $1.3 Billion in Royalties for Offshore Drilling

Tyson Slocum, Public Citizen, July 30, 2008

"A bureaucratic oversight has allowed 24 oil companies to avoid more than $1.3 billion in royalties for the privilege of extracting oil and natural gas from U.S. territory in the Gulf of Mexico - with foreign companies responsible for 55 percent of that total. But this $1.3 billion in forgone royalties pales in comparison to the $60 billion that Americans stand to lose in royalty revenue over the life of these leases. And if Congress repeals the moratorium on Outer Continental Shelf (OCS) drilling that has existed since 1982, these freeloading oil companies will be eligible to bid on new leases, providing them with more record profits while American families are left holding the bag. These 24 companies have posted a combined $365 billion in profits since 2006.

"The list of the specific companies comes from a February 2008 U.S. Department of Interior memo recently obtained by Public Citizen. Four of the 24 companies (BP, Marathon, Shell and Walter Oil & Gas) signed voluntary agreements to pay royalties going forward, but they will not be required to pay the more than $200 million taxpayers have been denied on production that already has occurred."

Oil Drilling Firms' Stocks Rise After Bush Lifts Executive Ban on Offshore Drilling

Laura Mondaro, MarketWatch, July 14, 2008

"President Bush said Monday afternoon he had ordered a reversal of an executive ban on oil and natural gas drilling in offshore U.S. waters, adding it was now up to Congress to turn his decision into law....

"The decision to lift the ban was quickly applauded by industry groups including the U.S. Chamber of Commerce and the American Chemistry Council, which say their members are suffering from escalating energy prices. Last month, Dow Chemical Co. said it was raising its prices by as much as 25% in July to offset higher petroleum input costs. At the same time, analysts noted any action to open up drilling - even if there's a remote chance of such a law making its way through Congress - could be a boon for oil drillers.

"Hercules Offshore Inc. and and Pride International stand the most to gain, said Pritchard Capital Partners' analyst Brian Uhlmer, because the firms have the largest exposure to drilling rigs appropriate for the U.S. continental shelf. Shares of Hercules gained 6%, outpacing a 2.1% rise in the Philadelphia Oil Service Index. Shares in Pride closed 0.8% higher."

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